Rethink Commerce Blog

Maximize Profits by Understanding Your Customer’s Digital Lifecycle

Posted on February 2nd, 2015 by

While every customer is unique in their own way, acquire enough of them and you begin to recognize patterns that can help you get and keep more over the long haul. In our experience, one of the most important patterns you can recognize and learn from is the customer lifecycle. The digital lifecycle, in particular, contains five typical stages that the customer moves through: acquisition, activation, up‐selling and/or cross‐selling, upgrading, and renewal. As the customers progress through each stage, they are presented with a particular experience that will ultimately determine their overall value to you throughout their lifecycle. 

The trick of course is to pay equal attention at each stage. This is because every one of the five stages is closely associated to the one before it and influences the customer’s mindset and biases when entering the next. A customer poorly engaged in the activation phase, for instance, is unlikely to be susceptible to your offers in the up‐ and cross‐sell stage.

As a business, your goal is to create a mutually beneficial, and not to mention, profitable relationship with each of your customers. One of the best ways to go about that today is to adopt customer‐centric strategies. Customer‐centric strategies are simply those that enable you to focus more on your customers and provide more meaningful services. Ultimately, being customer centric enables you to win customer trust, improve loyalty, reduce churn, boost customer lifetime value (CLV) and, well, maximize profits.

Not surprisingly, the key to developing customer‐centric strategies is understanding the specifics of the five digital lifecycle stages. Understanding each stage will help you tailor sales and marketing strategies, boost conversions, increase revenue per visit and optimize customer lifetime value.

In the next few paragraphs, we’ll take a deeper look at the journey the customer takes as they traverse the five stages of the digital lifecycle, and provide some tips for how to maximize profits along the way.

Stage 1: Customer Acquisition

The acquisition stage is all about attracting the attention of qualified leads and then bringing them to your website, e‐commerce platform or email marketing list for conversion. There are many strategies online companies use to attract new customers, including inbound marketing, affiliate marketing, content marketing, and paid advertising, among others.

At this stage, customers tend to be price sensitive since they’re not particularly high on loyalty. They, however, can be won over by tailored marketing communications that focus on providing them the “best” deal and/or best value for their money. Here is where it’s important to evaluate their pain points and make offerings that effectively solve them. Equally critical is actively differentiating your platform from the competition and communicating your clear value proposition.

It’s also important at this stage to monitor your website and email conversion rates. Improper channel integration, disconnected touch points, ineffective conversion and absence of local payment optimization are the leading causes of revenue loss. You can combat this by conducting test runs on both your website and landing pages to uncover the presence of these pitfalls and actively eliminate them.

Stage 2: Account Activation

Account activation is the on‐boarding stage, after you have successfully converted the visitor into a trial user or paying customer. Don’t make the mistake of ceasing communication just because you have closed the deal. To the contrary, you should use the opportunity to communicate frequently, with the aim of making your platform, products and services easier to use for activated customers.

Increase their engagement, and satisfaction, by adding them to user groups, discussion forums and the like. Hold seminars, provide FAQs and a resource library. Email them learning resources and follow other best practices for engagement and support. And publish helpful articles, e-books, blog posts and whitepapers to make product use easier.

Customers demand high engagement during the on‐boarding phase and are susceptible to churning if you don’t comply. It’s important to make activation easy by syncing licensing and entitlements, and by providing quick and hassle‐free billing. Here is where an automated billing system, as opposed to a manual one, can come in handy to ensure a positive initial experience.

Stage 3: Pushing up‐sells and cross‐sells

This is the stage where you can actively begin maximizing profits. Create content and email marketing campaigns to keep customers engaged. Offer promotions, special deals and the like to make them feel valued and appreciated. During this stage, you can also invest time and resources to build loyalty and turn customers into brand advocates, in preparation for stage four.

This is the stage with the greatest potential to build strong, long‐term customer relationships, and set you up for rapid growth. Keep that in mind when creating your customer engagement strategies. That and the fact that generating repeat business from this stage is significantly easier and less expensive than acquiring new customers will help you fashion offers of an appropriate value.

Ineffective promotions and limited service offerings are the biggest reasons why up‐ and cross‐sell offers fail. Your offers not only have to be attractive but also well integrated with your ads and promotions. In order to maximize profits, you’ll also need to promote the offers through multiple touchpoints and continually grow your portfolio of product offerings.

Stage 4:  Upgrades

Stage four is your reward for doing everything right in stages one through three. Enjoy it, but don’t mistake it as an opportunity to rest on your laurels. Customers at this stage may be satisfied, but they also expect more, and you’re going to have to give it to them, especially if you want them to take the next step and become brand ambassadors and/or active participants in your external marketing and promotions.

This is the stage where content marketing really comes into play. Your communications need to be targeted, personal and, of course, value‐driven. They need to include special and personal invitations to promotions and advanced product launches, as well as increased loyalty discounts. These customers expect the royal treatment, and you should roll out the red carpet for them without fail.

This is no time to slack. Lack of sufficient attention and support can jeopardize everything you’ve accomplished up to this point. Stage‐four customers expect easy access to call‐center support and self‐service options, and you need to ensure they receive both. Make sure to embed your upgrade strategies in the product/service experience to boost the value of your offerings. In addition, pay close attention to subscriber event and lifecycle management because your performance here is key to delivering a positive outcome in the final stage.

Stage 5: Renewals

And finally, the last stage, renewals, which in fact is a measure of your performance in the previous stages. Typically, generating a renewal is easy if you keep the customer happy in stages one through four. However, be sure to treat this stage with the same urgency as you treated stage one. Renewing a contract is after all just as valuable as getting a new contract.

Passive churn is perhaps the biggest problem at this stage. You want to make sure that your sales and marketing efforts are reaching customers effectively. Special email marketing campaigns and promotional events encouraging customers to renew are particularly important. So are offering deals, volume discounts, loyalty discounts and other incentives to sweeten the renewal offer.

At Avangate we help you to navigate through the customer digital lifecycle and maximize profits through digital commerce solutions and support. Contact us for more information about how our payment processing, integrated affiliate network and other digital marketing services will help you to grow your business.

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Raj Badarinath

VP, WW Product Marketing and Alliances

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Comments (1)

  • ANJALI says: March 2nd, 2015 at 9:21 am

    Nice article.Very useful for ecommmerce startups.